Now that the retired federal judge babysitting the Trump Organization has uncovered potential tax fraud at the company, the Trumps responded over the weekend by tasking their own accountant as a monitor that monitors the court monitor.
In an indignant court filing Monday morning, a lawyer for the Trumps for the first time launched an all-out attack on Judge Barbara S. Jones—calling her latest report on the family company an absolute lie, a cheap attempt to justify her government-mandated job, and a last-minute ploy to bolster the New York Attorney General’s bank fraud case that just wrapped up.
“Further oversight is unwarranted and will only unjustly enrich the monitor as she engages in some ‘Javert’ like quest,” he wrote, making a reference to the fictional French law enforcement officer in Victor Hugo’s Les Misérables, who’s defined by his obsessive pursuit and lack of empathy.
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The Trumps also complained about the $2.6 million they’ve had to pay Jones to do her job, dismissing her findings wholesale.
“That the monitor seeks to now perpetuate this folly is beyond the pale,” wrote Clifford S. Robert, who represents the Trump family.
The counterpunch comes just days after Jones revealed a bombshell about former President Donald Trump’s finances. In the run-up to the AG’s trial against the Trumps for lying about real estate values, New York Supreme Court Justice Arthur F. Engoron ordered that a court monitor watch over the sprawling family company to ensure it doesn’t shift or hide assets ahead of a potentially huge judgment that could cripple the business empire. Since then, Jones has issued nearly half a dozen reports indicating that, for the most part, all is well.
That is, until Friday, when she updated Engoron with a report that, as The Daily Beast first reported, suggested Trump lied for years about a supposed personal loan he made to one of his own companies—sleight of hand that may have allowed him to dodge taxes on nearly $50 million in income.
“When I inquired about this loan, I was informed that there are no loan agreements that memorialize the loan, but that it was a loan that was believed to be between Donald J. Trump, individually, and Chicago Unit Acquisition for $48 million,” she wrote.
That tiny footnote made big news Friday afternoon—just as Trump lost his second rape defamation trial and was ordered to pay $83 million to the journalist E. Jean Carroll.
The Trumps’ lawyer pushed back on that report Monday morning, labeling her assertion a “demonstrable falsehood”—and calling into question her ability to do her job.
“The Trump entities of course never said the loan did not exist. Rather, they provided a copy of an internal memorandum reflecting simply that ‘no liabilities or obligations are outstanding’ under the loan at that time,” Robert wrote. “The Monitor’s deliberate mischaracterization casts further doubt on her competency and veracity.”
But the apparent proof the Trumps cite for that claim does not confirm that the loan ever existed.
The memo, an unsigned and vague “inter-office memorandum” sent by the “legal department” to “file” last month, describes an entirely different loan arrangement. The loan that Trump listed on his presidential financial disclosures was a $48 million loan from Trump’s “Chicago Unit Acquisition LLC” to Trump personally. But this memo now says the loan was from Chicago Unit Acquisition LLC to another entity, called “401 Mezz Venture LLC.” The memo also simply states that the loan is over and done with. It offers no other explanations about whatever happened to the $48 million.
“This shall confirm that, as of the date hereof, with respect to the above-referenced loan, no amounts are due or payable, such loan is of no force or effect, and no liabilities or obligations are outstanding,” it writes. The filing also references a “discussion” that Trump Org counsel Alan Garten had with Jones about this loan, but offers no details about what was said in the conversation. In a phone call with The Daily Beast on Saturday, Garten claimed repeatedly that the loan was between Chicago Unit Acquisitions LLC and Trump personally, and that Trump had loaned the money to the LLC.
However, Justice Engoron is likely to view that with suspicion. He spent years forcing the Trumps to turn over evidence, has seen documented evidence of the billionaire lying about the size of a Trump Tower triplex, and has repeatedly deemed their experts and testimony as unreliable at trial. On top of that, the Trump Organization is currently in hot water for faking internal paperwork related to its legal work and expenses—the very reason that Trump is facing 34 felony charges from the Manhattan District Attorney over the cover-up of his alleged sexual affair with the porn star Stormy Daniels, a trial set to start in March.
The Trumps also fired back against Jones by recruiting their own certified public accountant to back up their claim that she’s got it all wrong, one who wrote that, “Based upon my education and experience, my review of the various reports, and the express language contained in those reports, the Monitor did not identify any financial reporting misconduct, suspicious activity, or any suspected or actual fraud.”
But that too might fail to convince the judge, because it came from Jason Flemmons, a CPA who lost credibility when testifying at the recent bank fraud trial. Justice Engoron tore into the accountant last month, noting how Flemmons had “inexplicably” contradicted himself several times and seemed willing to bend over backwards to appease the Trumps. Engoron was annoyed at how Flemmons kept providing cover for the Trump family, like when he asserted that basic accounting principles require that an asset’s present value reflect discounted future income—but refusing to admit the Trumps broke the rules when they failed to do that.
So far, the period reports issued by Jones have been muted, failing to reveal much of anything spicy or salacious. The closest they came to that was in November, when she caught Trump quietly moving $40 million from the Trump Organization into a personal bank account, apparently to cover a whopping $29 million tax bill. But even that didn’t hint at any wrongdoing.
But with her latest report, Jones has struck a nerve—and the Trumps are quickly scrambling to cut her loose.
In the closing pages of his Monday court filing, Robert downplayed her nearly year-long investigation as nothing more than a costly exercise in hunting for minor mistakes that don’t amount to anything. And he called her recent findings “self-serving hyperbole.”
“The monitor has thus far been paid over $2.6 million in the past 14-months to ‘uncover’ seven immaterial disclosure items, three irrelevant inconsistencies and five clerical errors,” he wrote. “The court therefore must and should end this abusive and costly process.”
